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Survey says: Treasurers Want More Accurate Cash Forecasting
28-03-2022 | treasuryXL | Gtreasury | LinkedIn |
Modernization is quickly coming to cash forecasting. Corporate treasury teams are accelerating their embrace of new technology strategies and are refining existing methods to introduce greater automation, efficiency, and accuracy. The trend has undoubtedly been spurred by the pandemic, during which treasurers have sought greater access to data in order to optimize cash management – as best they could – during periods of relative uncertainty.
In the recently released Cash Forecasting & Visibility Survey undertaken by treasury analysis firm Strategic Treasurer, nearly 250 professionals from across the global treasury ecosystem weighed in on their current and future state of cash forecasting. The results paint a picture of an industry with an acute demand for faster forecasting and real-time global cash positioning, a growing appetite for emerging AI/ML technology, and plans for heavy spending to realize more rapid and accurate forecasting processes.
Source
The report is worth a read in full, but here are four of the biggest takeaways for treasurers:
1. Low-tech cash forecasting is still being widely used, but high-tech is the far more popular choice.
The vast majority of treasury teams still use traditional (and very manual) forecasting tools. Ninety-one percent of respondents report using Excel as one of their forecasting tools. In comparison, one-quarter have a treasury management system (TMS) in place, and 28% use ERP systems. Fifteen percent use financial reporting and analysis (FR&A) or budgeting tools to assist in their forecasts, and just 5% use a dedicated forecasting platform.
While Excel is the leading forecasting tool by usage, it clearly lags in making treasurers happy. Fifty-seven percent of those utilizing a TMS or ERP are satisfied with their tooling, while just 42% of Excel users say the same.
Variance analysis is another task requiring heavy manual effort from treasury teams. Fifty-seven percent of respondents say that their variance analysis activities are fully manual, and another 19% report significant manual activities. One-fifth of companies only avoid this manual effort by performing no variance analysis whatsoever. The remaining 5% of respondents utilize variance analysis that’s backed by fully-automated processes.
2. Cash forecasting is a major priority, receiving major investments.
Fifty-nine percent of treasurers believe that the importance of cash forecasting will increase in 2022, with 27% saying it will become significantly more important. At the same time, nearly half of respondents say they currently have an “extremely difficult” time generating forecasts.
As a result of this unfulfilled need, 35% of treasury and finance departments report plans for extremely heavy spending on technology for treasury systems and cash forecasting capabilities. Forty-one percent plan to focus significant spending on treasury systems in the next year, while 40% plan similarly significant spending on cash forecasting. Additionally, respondents reported heavy technology spending plans that specifically focus on bank account management (33%), reconciliation (28%), payments (28%), and cash reporting (27%).
3. AI/ML-powered cash forecasting will increase over 400% in the next two years.
While just 6% of respondents currently use AI/ML technology to power cash forecasting, their reported plans indicate that within two years that number will reach 27%. Further out than two years, that jumps to 51%.
Respondents also indicate a similarly bright trajectory for regression analysis: 12% use it currently, projected usage will grow to 29% in two years, and 43% use or expect to use it in the future.
4. Forecasts peer further forward in time (and treasurers would forecast even more, given the time and tools).
Respondents report increasing the frequency of their cash forecasting: 55% now forecast either weekly or daily. Forecasts extend to a more distant time horizon as well, with a plurality of 39% of respondents now looking ahead six months or more, and another 35% forecasting between two and five months out.
Respondents also expressed a greater appetite for cash forecasting than what their current tools and time requirements can feed. If available, 64% of respondents would invest more time to improve the accuracy of their forecasting. Forty-six percent would use extra time to perform variance analysis. One-quarter would increase both the frequency and outlook of their forecasts.
The upshot: Treasurers are in hot pursuit of better cash forecasting capabilities.
The survey’s findings are beads strung along a common thread: treasury teams recognize and demand the benefits of more efficient and effective cash forecasting. With investments in TMS, ERP, AI/ML, regression analysis tools and more, many treasurers are already pursuing new strategies and spending what it takes to place the strategies and technologies they require at their command.
SAP Integration with the SAP Add-on
24-03-2022 | treasuryXL | TIS | LinkedIn |
Outsource the technical challenge of bank connectivity to a payments expert.
Benefits of integrating TIS with our certified SAP Add-on
For many SAP clients, bank connectivity is a technical challenge. Find out, how integrating SAP with TIS can help you:
The SAP Add-on is available for all systems (SAP ByDesign, ECC6.0, S/4HANA on-premise, public cloud and private cloud).
Download the free Fact Sheet
When Is the Right Time to Move to APIs?
23-03-2022 | treasuryXL | Kyriba | LinkedIn |
By Andrew Deichler, Content Manager, Strategic Marketing
Application programming interfaces (APIs) have the potential to revolutionize the treasury and finance function. But when is the time to move to APIs, and when is file transfer protocol (FTP) still sufficient?
Let’s explore the use cases for APIs and when it is appropriate to begin using them. We’ll also look at areas where FTP is still sufficient.
Source
API Use Cases
Largely viewed as conduits for faster bank connections, APIs allow systems to exchange data faster. Unlike FTP, APIs do not require any kind of file download to transmit information; users have instant access to the data they need.
Major ERP providers are working with API developers to embed APIs into their workflows so users don’t need to take any action outside the ERP. For example, Kyriba is working with SAP, Oracle, Microsoft Dynamics and others on API connectors. And Kyriba users can also integrate APIs into their ERPs on their own with our plug-and-play solutions.
APIs have nearly limitless potential. They can facilitate an open ecosystem that enables third-party developers to build applications on top of the API provider’s platform. Through such a platform, corporate treasury and finance departments can expedite the flow of data. Kyriba’s Open API hub, launched in 2021, is an online marketplace of real-time connections to apps, data, and new products and services that inject data-driven decision-making into every financial operation.
APIs offer treasury and finance many capabilities that they haven’t had before, such as the power to “un-batch” payments. Rather than relying on batch processes that transmit at several pre-determined times each day, APIs allow payments to be initiated from treasury management systems and ERP systems as needed—even in real time. In fact, real-time payments require the use of an API because payments can’t be transmitted instantly if a file needs to be downloaded.
Furthermore, APIs can also un-batch reporting, allowing organizations to manage cash continuously and in real-time. Just like batch payments, batch reporting is constrained to set times each day. APIs allow treasury and finance teams to receive intraday liquidity updates as needed, improving the ability to position, reconcile and invest cash. And immediate visibility into cash also allows companies to vastly improve forecasting.
FTP Isn’t Going Anywhere Just Yet
All that said, FTP isn’t dying out just yet. Banks and technology solutions providers that are managing open platforms are not replacing legacy formats with APIs; rather, they are offering them as a complement to these formats.
Furthermore, the rollout has been slow; most banks are not using APIs in live production yet. And the ones that do mostly offer them for certain real-time services—meaning that multiple connectivity options are needed to fully support a treasury and finance team.
But even if you have full API capabilities, they may not be appropriate for every type of data transfer yet. Generally speaking, FTP is better for large bulk transfers of data, while APIs are preferable for smaller, more specific transfer needs. And even though APIs can virtually eliminate the need for batching, some organizations may not see a need to end the practice—and they’ll need FTP to do that.
Lastly, FTP has been around for many years, making it compatible with legacy systems. Unlike API connections, which require that systems on both ends support the technology, FTP only requires that the appropriate file format be used. So, FTP won’t require any major conversions for your software. In other words, if the status quo is working for your organization, you may not see the need to make any changes right now.
API and SFTP Capabilities
In many ways, APIs bring key advantages over a file-based approach, such as an immediate response from banks and the ability to receive new data and notifications in real-time. But for the time being, flat-file technology is still very much in use.
Fortunately, Kyriba users don’t have to choose one or the other. Kyriba connects to 600 global banks on behalf of our nearly 2,500 clients using a variety of connection protocols, including APIs and FTP. So regardless of whether your bank and ERP are set up for APIs or not, Kyriba can ensure that you’ll have the right connectivity for your organization.
For more information on APIs, view our API Whitepaper, Fact Sheet and Infographic.